Goodman Group avoids second strike on remuneration

Goodman has avoided a second consecutive strike against its pay practices, but investors remain unhappy with incentive structures.

Greg Goodman: CEO of Goodman Group Picture: James Croucher

Industrial property powerhouse Goodman has avoided a second consecutive strike against its pay practices, but investors remain unhappy with incentive structures that have helped propel its chief executive to be the highest paid in the listed real estate sector.

The billionaire chief, Greg Goodman, was paid $12.4m last year and proxy houses this year endorsed the listed company’s practices, with a 16 per cent protest against the remuneration ­report.

This meant Goodman avoided a second successive strike against its remuneration report after it last year copped a first strike with a 45 per cent vote against.

A strike this year could have led to a spill vote for the whole board, but proxy advisers sought to avoid the outcome at the sector darling that is benefiting from the switch to e-commerce.

The listed company’s veteran independent chairman, Ian Ferrier, a staunch defender of the chief executive who helped drive its global funds network to close to $50bn, indicated he would depart next year.

He has defended the company’s practices and proxy advisers CGI Glass Lewis and ISS both backed the remuneration package, although they were critical.

“There is no question that strong remuneration outcomes are aligned with the strong underlying and long-term growth,” ISS told clients.

“However, the group is pushing the limits of acceptable levels of remuneration in the Australian market, to the extent that it can be best described that CEO and executive remuneration outcomes are ‘over-aligned’ in the context of this market.

“A five-year total shareholder return of 28.4 per cent is indicative of the group’s focus on longer-term performance. Consideration of remuneration will remain a balancing act in future years.”

The retiring Mr Ferrier said he and the board’s head of the remuneration committee had met with a number of local and international investors, proxy advisers and other key stakeholders.

Goodman did not let the vote slow its ambitions of dramatically expanding its holdings in Australia and key markets across Asia and Europe as it deals with rising demand for warehouses.

“In Australia we are continuing to concentrate on the primary markets of Sydney and Melbourne, where more than 90 per cent of our properties are,” Mr Goodman said.

“We are buying infill sites and continually looking to innovate by exploring multistorey and brownfield developments that intensify the use of land holdings we have had for some time.”

Overseas investments have also lifted the company returns, with Goodman expanding in the US, where it is developing rather than buying portfolios.

Investment in the US is currently approaching $6bn and expected to grow as the company builds on its major city strategy by acquiring key sites in New Jersey and Los Angeles. This week it picked up a 26.3ha site in LA’s Orange County, a key infill area.

Mr Goodman affirmed growth forecasts for the 2020 financial year, with operational earnings per security of 56.3c, up 9 per cent.

Goodman fell 36c to $14.44.